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Accenture Outlook | Hypergrowth and M&A Success in Asia

Accenture Outlook | Hypergrowth and M&A Success in Asia

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Published by Accenture
New research into a decade of deals worth nearly a trillion dollars looks into what made the difference in the Asia region between realizing positive returns on M&A—or not.
New research into a decade of deals worth nearly a trillion dollars looks into what made the difference in the Asia region between realizing positive returns on M&A—or not.

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Categories:Business/Law
Published by: Accenture on Dec 09, 2013
Copyright:Attribution Non-commercial

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02/07/2014

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The journal of high-performance businessThis article appears in the 2013, No. 3, issue of 
 By the Numbers | Mergers & Acquisitions
Hypergrowth and M&A success in Asia
 By Ryan McManus, Mirko Dier and Sarah Ali
New research into a decade of deals worth nearly a trillion dollars looks into what made the difference in the region between realizing positive returns—or not.
 accenture.com/outlook
 
2
Outlook 2013
Number 3
More mergers and acquisitions actually create value than destroy it. That was the somewhat surprising finding in our analysis of global M&A activity from 2002–2009, first reported in
Outlook
 in early 2012.  And that wasn’t the only myth debunked by our research. We also discovered that top-quartile performers—and often even median ones—could in fact create substantial amounts of shareholder  value at any point in the economic cycle, in any industry and even in any region.
 Value-creating deals >0%Significantly value-creating deals >20% Value-destroying deals <0%Significantly value-destroying deals <(-20)%
Source: Accenture analysis
M&A value creation
The Asia Pacific region offers an area ripe for further analysis. M&A activity in the region continues to grow steadily, including an increasing emphasis on international expansion. We analyzed the 50 largest transactions in 11 geographies in Asia for a total of 550 deals made by publicly traded acquirers between 2002–2011. Following is a statistical snapshot of our findings of what made the difference between realizing positive returns—or not. 
Total return to shareholders versus industry benchmarks
35%16%18%30%
 
3
Outlook 2013
Number 3
Source: Accenture analysis
Catching the wave
While success came to players at any point in the business cycle, timing does matter. Companies had their best chance of creating shareholder value when leaders acted during the ride up to the peak of a bull market, not when the market was falling or during the early phases of an economic recovery. By far the best years for creating value through M&A were 2002, 2005, 2006 and 2011.
Median total return to shareholders versus global GDP growth (24 months)Size of bubble indicates average deal size
-15%25%20%15%10%5%-5%40%35%30%25%20%15%10%5%-5%-10%0 30%0
   A  n  n  u  a   l   i  z  e   d   G   D   P  g  r  o  w   t   h
Median TRS
2009200220052006201120082007201020032004
Source: Accenture analysis
Size matters
Smaller deals create value more consistently. Deals valued at less than $500 million had the highest return for the top-quartile performers, while those greater than $2 billion had the lowest returns.
Deal size as percentage of deals, by size of deal
108135114193Number of deals$5,180$1451$681$271Average deal size ($ millions)-11%3%-2%12%Median TRS16%-32%46%-23%36%-21%56%-24%Acquirer TRS versus industry indexRange=2nd and 3rd quartile (25th–75th percentile)> $2$1 – $2$.5 – $1$0 – $.5($ billions)

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